The overall Index of Industrial production (IIP) in FY 2025 grew by 4%. It was higher at 5.9% in FY 2024. This implies that industrial activity has slowed down in the last fiscal. What may be the reasons behind this? The global uncertainty in economic performances and lower export growth and low consumption growth in the economy are considered as possible reasons behind poor performance of
industrial activity in FY25.
But IIP data are published on monthly basis. The IIP grew by 3% in the last March. This is slightly higher than the previous February’s 2.7%. The main reason behind this increase has been on account of
rise in power generation. Electricity generation generally increases in the summer season. In February power grew by 3.6% and in March it grew by 6.3%.
The overall fall in IIP in FY25 is a grave concern
The main reason for poor performance of industrial activity has been steep decline in mining sector from 7.5% in FY24 to only 2.9% in FY 25. The similar result was seen for manufacturing. The sector grew
by 5.5% in FY24 and it fell to 4% in FY 25.
Another area of huge concern has been de-growth of non-durable goods. It grew by minus 1.6% in FY 25 and the growth of this sector was 4% in FY 24. But the opposite scene is observed in case of durable goods production. The durable goods grew by 8% in FY25 whereas the sector grew only by 3.6% in FY 24.
Some analyst thinks that doubling growth of this sector is a testimony to uptick in urban consumption. Whereas the rural demand was timid in that period as the food prices were higher for several months,
particularly, in the last months of the calendar years 2024.
Analysts think the poor performance of IIP in FY2025 indicates considerable strain in MSME that contributes 45.8% in exports. In the continuing uncertainty in economic activities around the world
Indian government has to take initiative in such a way the jobs in the small and medium scale sector remains protected. This may be the necessary condition for the economy to stay afloat in this
situation.
